TO FACILITATE COMPETITION FOR COASTAL FISHERMEN

The Competition Council in its regular meeting examined the findings of the investigation conducted thereby in respect of the compliance of the legal acts passed by the Ministry of Agriculture of the Republic of Lithuania and the Fisheries Department under the Ministry of Agriculture governing fishing operations in the Baltic Sea with the requirements of Article 4 of the Law on Competition. The Resolution passed by the Competition Council obligated, within the time limits of 3 months to repeal or amend the provisions and individual clauses of the legal acts and decisions of the above public authorities in a way that the legal acts are not in contradiction with the Law on Competition.

The investigation was initiated in response to the application lodged by the Association of the Coastal Commercial and Recreational Fisheries. The applicant requested the Competition Council to investigate a possible infringement of the competition conditions of the coastal fishing enterprises in the Baltic Sea by an unfair quota distribution system, prohibition to fish beyond the 20 m isobath line, and the discriminatory terms established in respect of the first fishing vessels segments (coastal vessels) as compared with other vessel segments, etc.

Article 4 of the Law on Competition establishes the duty upon public and local authorities when carrying out the assigned tasks related to the regulation of the economic activity ensure the freedom of fair competition. Therefore the adoption of any legal acts or any other decisions that grant privileges or discriminate selected economic entities in respect of the undertakings competing in the same relevant market except where the difference in the conditions of competition cannot be avoided when the requirements of the laws of the Republic of Lithuania are complied with, may result in an infringement of the Article of the Law on Competition in question.

Over 100 economic entities are engaged in fishing activities in the Baltic Sea for that purpose using “small” and “large“ vessels catching fish by way of selective fishing. The fishing enterprises in the open sea arrange fishing on longer and more powerful vessels, or by using dedicated fishing trawls. Nevertheless, the fishing resource users of both categories are engaged in the same activity in the relevant market, therefore operating as competitors.

The investigation conducted by the Competition Council covered the analysis of the provisions of the legal acts that could have possibly triggered differences in competition conditions for the undertakings operating in the same market. It was established that item 6 of the Rules on the Allocation of Fishing quotas in the Baltic Sea approved in June 2007 by the Order of the Ministry of Agriculture provides that the new fishing resource users in the Baltic Sea or the coastal areas of the Baltic Sea may be allocated the requested fishing quotas only subject to the approval by more than half of the companies fishing in those water bodies or the organisations representing them. Given that according to this provision the enterprises fishing in a specified water body are entailed to refuse to approve the allocation of the quota to a new user - preconditions are created to prevent the new company from entering the market. Thus the fishing resource users operating in the Baltic Sea or its coastal areas are privileged in respect of the new resource users who are refused the fishing quotas. Furthermore, items 18 and 21 of the Rules on the Allocation of Fishing Quotas in the Baltic Sea establish different principles for the allocation of the fishing quotas, which in turn result in different conditions for competition, i.e., privileges are granted to major vessels thus discriminating small fishing boats fishing in the coastal areas of the Baltic Sea.

The prohibition imposed upon small vessels to fish beyond the 20 m isobath even where their technical capacities allow them to do so, may also result in the development of different competitive conditions for the participants of the same relevant market. On the one hand, this prohibition clearly acts as a privilege for major vessels since fishing resources in the open sea are beyond comparison more abundant than in the coastal areas, which is confirmed by the proportions of the allocation of cod quotas (respectively, 95 percent and 5 percent). On the other hand, the removal of such prohibition would contribute to the objective to protect the sensitive ecosystem of the coastal areas of the Baltic Sea, as allowing the technically capable vessels to fish beyond the 20 m isobath would reduce the number of vessels fishing in the coastal area. In particular, as the EU legal acts provide for the segmentation of the fishing fleet, rather than of the fishing basins.

With a view to controlling that the enterprises engaged in fishing in the coastal areas limit their operations to the areas specifically dedicated to them, the fishing areas in respect of such fishing enterprises are segmented into fishing sections. In the opinion of the Competition Council the legal act passed by the Ministry of Agriculture may provoke differences in competition conditions (due to the differences in the operations terms) both for the enterprises fishing in the open sea and in the coastal areas, and the coastal fishing enterprises due to the different fishing sections established in respect thereof.